iPhone price hike likely after warranty stand-off

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iPhone price hike likely after warranty stand-off

The price of mobile plans bundled with the Apple iPhone appear destined to rise, as Apple steadfastly refuses to bow to industry pressure to allow its telco partners to offer repair services for the device.

The Australian Consumer and Competition Commission (ACCC) announced late last week that it had struck an agreement with Telstra to ensure that devices sold on 24-month plans included warranties for 24-months - 12 months more than the standard warranty offered by most device manufacturers.

But, like the undertaking struck with VHA in May, the ACCC's deal with Telstra applied to all handsets except the Apple iPhone. ACCC chairman Graeme Samuel said in May that the regulator "would not condone" that particular exception again in the future.

Today, Samuel said that his position hasn't changed. He re-stated that the ACCC would continue to push for 24-month service contracts on all devices and said the issue must be resolved between carriers and manufacturers.

Samuel acknowledged that "Apple is being difficult" with its carrier partners but said this is "none of the ACCC's business.

"The discussions the retailer has with the manufacturer is frankly of no concern to us," he said. "Our concern is the outcome for the consumer."

Who bears the cost?

Should Apple continue to refuse to cooperate, Samuel said the manufacturer would most likely charge its carrier partners for an additional 12 month warranty on those iPhones bundled in 24-month plans.

The telco - being faced with a price per unit that is several hundreds more over the life of the plan - would either have to absorb this cost or pass it onto consumers.

Samuel said that ultimately consumers may resolve the problem in the open market.

"Consumers will look at the higher price of an iPhone plan, compare that to other devices on the market, and say 'I'm not sure I want to spend that much money'," he said.

Higher iPhone prices are likely to boost the sales figures of competing devices running Google's Android operating system (available from HTC, Samsung and others), the upcoming range of Windows 7 phones or RIM's Blackberry devices.

"In our view, a 24-month warranty is a requirement for 24-month plans," Samuel said. "VHA and Telstra know this has to be dealt with, so does Optus."

A spokesman for Optus said that, as the carrier is still in negotiations with the ACCC over the 24-month warranty issue, it could not make a formal response.

"We're hoping to resolve the issue by the end of the year, if not sooner," the spokesman said.

The issue is particularly difficult for Optus, which has been the most aggressive among its peers in chasing the iPhone dollar.

Spokesmen for Apple, Telstra and VHA were unable to comment before publication.

What do you think? Should Apple fall in line with other device manufacturers and allow telcos to repair its phones or should telcos absorb the cost into their plans? Have your say below and vote in our poll on the front page of iTnews.

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